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The Prixciples and Policy of the Democratic Party. 



A LETTER 



FROM THE 



HON. ELIJAH WARD 



The First Duty of the Government and People ; Comprehensive Review of our 
Recent Financial History ; Errors of the Administration ; Striking Contrast in 
France; The Law of Financial Panics; Necessity of a Fixed Standard 
of Value ; When and How to Resume ; Benefits of a Revenue 
Tariff ; An American Commercial System ; Pacification 
and Prosperity in the South ; Republicans Tried 
by their Acts and Found Wanting; Popu- 
larity of Democratic Principles; x\ll 
Wlio Think Alike Should 
Vote Alike, Etc., Etc. 



REPUBLISHED FROM THE NEW YORK WORLD'. 




NEW YORK; 

F. B. PATTERSON, PUBLISHER, 
32 Cedar Street. 

1875. 






PUBLISHER'S NOTE TO THE READER. 



The present condition of the country being such as to render im- 
portant to the people at large the impartial and tempei'ate discussion 
of sound political principles, in their application to the living issues 
of the da}', I deem the letter of the lion. Elijah Ward to the New- 
York World well worthy of publication in a more permanent form. 

F. B. Patterson. 



THE 



PRINCIPLES AND POLICY 



OP 



THE DEMOORATIO PAETY. 



In the present state of the nation, it is of the highest importance that 
correct views and principles sliould be placed before the people, thus con- 
tributing to the progress of sound opinion. A candid exposition of the perils 
surrounding us is much more conducive to the public interests than specious 
and delusive promises can be. The people are disposed to look to the Dem- 
ocratic party for a return to economy and integrity in the administration of 
public affairs, and for the introduction and adoption [of measures well cal- 
culated to restore to a safe and harmonious basis the financial, commercial, 
and] material interests of the nation. It yet remains to be seen whether 
the future leaders will fully recognize the exigencies of the occasion and 
perceive that the country has passed through a great revolution, and that 
revolution is progress. The living issues of the present time are those to 
which attention should be given. Having devoted much thought to them 
and the current of events for many previous years, I submit my views and 
suggestions to the public, in the hope of aiding in the dissemination of 
truth, and of securing in the next Congress the cooperation of those with 
whom I shall be associated, in well-directed efforts for the enactment of such 
just laws as will afford the best and most permanent relief to our country. 

Wliat is most Needed. 

The first and greatest of all the changes demanding public attention is 
integrity in public affairs. An administration, regarding freedom of govern- 
ment as the right of each member to scramble for emoluments and honors for 
himself and party, instead of rendering faithful service to the country, has 
long held almost plenary possession of power. This is the most prolific source 
of all the national troubles. Reform iu this respect is the course on which 
the people most strenuously insist. On this point, all, except thosa who are 
held together by the cohesive strength of plunder, are agreed. They 
subordinate every other question to this single one, which has now long and 



loudly demanded settlement. The only danger that their desired purposes 
may not be fulfilled, is that they may be conquered by their enemies, through 
the old plan of dividing those who mean well. If those who think alike 
will vote alike, their cause is safe. Integrity and fair dealing are so 
intimately blended with other sound principles in practical politics, that 
Avhen this vantage-ground is gained there will be less disagreement than 
may be commonly expected on the other leading topics of the times, such 
as an honest currency, justice to the South, and a tariff alike favorable to 
the collection of revenue and the progress of commerce and manufactures. 

Long after all pretext of temporary necessity has ceased, the country 
is afflicted by a debased currency of broken promises to pay, demoralization 
flagrantly and confessedly pervades almost every department of the national 
administration, in the South hostility between the races is encouraged, for the 
sake of the sordid profits of a few favorites of the administration It is sought to 
retain in power, and the mode of levying taxes was declared by the finan- 
cial leader of the majority of the House of Representatives, at the last session, 
to be merely the result of rival grab-games for contending interests in the 
national legislature, which has repeatedly lent itself to fraudulent subsidies 
and other universally admitted perversions of public trust. Taxation and 
maladministration, under the present management and control, have become 
incomparably more oppressive than those against which our forefathers 
rebelled, and, unless the source of our difficulties is checked, threaten even 
to subvert our institutions. 

Trite as it is to say that " honesty is the best policy," the essential truth 
has long been laid aside with many forgotten errors, and its practical appli- 
cation is alike the great need of the times and demand of the people. 
Through it only is the way to economy, diminished taxation, and renewed 
confidence and prosperity. In the end, it will be found to include all other 
public necessities. Without it there can be no reliable reform, and the peo- 
ple will continue to be wronged either by commending evil doctrines, or by 
intrigues robbing sound principles of their proper effect. Integrity in those 
who make our laws and manage public affairs is as needful to the well-being 
of the people as a firm footing and a pure atmosphere are to the progress and 
life of individuals. 

The remedy is in the hands of the citizens. They can insist that merit — 
integrity and ability — not merely zeal in political intrigues, shall be the quali- 
fication for all appointments to office and retention in them. The voters need to 
be on their guard against the numerous class of men who estimate all things by 
the personal emoluments or power derived from them. Carelessness in this 
respect is the mainspring of all our national disgrace and disasters. No laws 
or institutions, however admirable, can secure the interests of the people, if 
they themselves become indifferent or inactive in public affairs. 

The Duty of Investigation. 

As the people are compelled to practice economy themselves, they ex- 
pect that the administration will conform to the same standard. From 



Wasliington and the District of Columbia to the farthest homes of the wild 
Indiau tribes, the management of the party in power is permeated by extrava- 
gance and corruption. Exposures are sometimes made, but we have reached 
a period when the strongest proofs of self- convicted offense are paraded be- 
for.e the public gaze as proofs not of the guilt of those Avho are responsible for 
the acts, but of their virtue. Leading Republicans do not hesitate to assert 
that the worse their party is proved to be, the more meritorious it is. Credi- 
ble assertions are made that the United States are defrauded of at least one 
fourth of their rightful revenue, througli the misconduct of the officials in- 
trusted with its collection. Incalculably greater injury is inflicted on the 
people by the preventible evils in legislation and other forms. The extent 
to which these have been carried can never be known unless there is a 
chauire in the 2)ersonnel of the administration. Persevering investigation is 
absolutely necessary, not onlj' to arrest the present wrongs, but as the best 
means of discovering the proper measures for lasting reform and improve- 
ment. 

Pi'esent Embarrassments and tlieir Causes. 

The present embarrassment of our financial and commercial interests 
demands serious and profound attention. Its effects are felt by the neople 
of all pursuits in every part of the Union, and, without distinction of party, 
they imperatively require the application of the best attainable remedy. 
Capital lies idle in the vaults of the banks, and is offered at lower rates of 
interest than at any other period in the history of this continent, while mul- 
titudes of men and women, to an extent also hitherto unparalleled, are pre- 
senting that " saddest sight on earth" of being able and anxious to work, but 
unable to find the work to do. 

To understand the nature of the disease which is now preying on the 
vitals of the country, we must refer to its origin, and trace its insidious pro- 
gress, reviewing the financial history of the war impartially and in the light 
now thrown upon it by the decisive lessons of the past. 

The rebellion was precipitated on the country unexpectedly to the 
party in power, who were slow and unwilling to comprehend its real magni- 
tude. The repeated prophecies of leading statesmen that it would succumb 
in a few weeks, are yet fresh in our memories, and will never fail to arrest 
the attention of all students of our history. As the nature of the impending 
dangers was not understood, neither tlie military nor pecuniary measures 
needed to meet them were promptly undertaken. The antiquated and ex- 
ploded financial theories of obsolete European statesmen and of our own in 
former days, were again put into practice and once more proved to be erro- 
neous. Those who gave more far-seeing counsels were fortunate if they 
escaped opprobrium. While the North believed that the crisis would rapidly 
pass over, the South mistakenly supposed the North would yield to its 
demands. The battle of Bull Run, when the Capital itself was endangered, 
in part dissolved the illusion on both sides ; but the financial errors which 
had taken root were destined to be worked out to their logical results, which 
have now swept over the country and can only slowly be overcome. The 



sole consolation is tliat the Union lias been preserved, and tliat by ^vise and 
honorable management, it may be restored iu spirit and fact as fully as it 
now is materially and in form. 

Financial Errors of the Republicans. 

The short-sighted policy of deluding by make-shift expedients, instead 
of following the standard of the real and permanent good of the public, as 
fixed by immutable natural laws, was too conducive to the personal and 
partisan interests of those in power to [be readily abandoned. At the extra 
session of Congress, in July, 1861, it was simply indicated that, in view of the 
expected brief duration of the war, the government would make a loan of a 
hundred and fifty millions in gold from the banks of New- York, Boston, and 
Philadelphia. Before the 17th of November, in'the same year, they had ac- 
tually advanced one hundred and forty-six millions in this form, and their 
system was so strong that after the last part of the loan had been nearly or 
quite paid, the gold and silver in the banks, which had at the beginning been 
less than fifty millions, was forty-two millions. The specie for a long time 
returned to the banks in the ordinary course of business. The Treasury con- 
tinued to demand •' thirty millions a month," and insisted that this should 
be paid only in coin. The banks yet had more than sufficient specie for the 
transaction of their own business, but further steps were taken to destroy the 
State banks. 

The government, which should have guarded the banks carefully, so that 
they might have kept up the value of the currency by a knowledge of their 
strength, scattered the gold, and it could neither be lent over again in suffi- 
cient quantities or made available as a reserve for the banks. Suspension 
followed on the 31st of December, soon after the meeting of Congress, at its 
next regular session. 

Even in the beginning of January, 1862, specie and paper money 
yet remained of equal value. At that date, due sagacity and prudence 
would have prompted the instant adoption of a system of adequate taxation 
and other well-considered and suitable measures of providing for the ex- 
penditures of the war. The government having, by its own action, forced the 
banks into suspension, authorized, on the 2oth of February, 1862, a large issue 
of " legal tender," receivable " for :fall [debts except duties on imports and 
interest on the public debt." In these notes, the distinction was, for the first 
time in history, made by a government between specie and its own paper. 
Thus the door was opened wide to the enormous over-issue of paper money, 
which led to the inflation of prices, and, but for our natural wealth and 
strongly national spirit, would have been fatal to the government and 
immediately disastrous to the business of the people. It was deemed more 
creditable to create fictitious and exaggerated prices of labor and commodities 
and an artificial appearance of prosperity than to enforce prompt taxa- 
tion. 



9 

Billions Lost to Save One per Cent. 

The adniinistratiou having created an unfailing demand for gold, and 
fanned the fire of speculation by the terms of the original notes which were 
exchangeable for United States 6 per cent bonds, withdrew even this right of 
redemption after July 1st, 1863, and, more anxious to produce a seemingly 
low interest than to protect the people against an actual dejireciation of the 
national securities, which reached the low rate of 35 cents on the dollar, 
made an inglorious and suicidal effort to raise loans at five per cent. The 
continuance of the right to exchange the " legal-tender notes" in six per 
cent bonds might have effectually prevented the currency from becoming re- 
dundant, as it might have been continually checked by investments in the 
bonds for the sake of interest. The 6 per cent bonds were sold at the rate 
of $1,500,000 to $3,000,000 a day— iimounts nearly equal to the daily ex- 
penses of the government. Of the loan at^the lower rate, little was taken 
except by bankers, who used the bonds in\the organization of national 
banks.' The funding was substantially arrested for several months. Many 
times the sum of tiie , interest sought to ^be saved was lost in the en- 
hanced rates of purchase for the army and navy, and, under a needlessly in 
flated currency, a war debt of over two thousand and eight hundred millions 
of dollars was incurred, although the value received, reckoned in gold, was 
probably not more than forty cents on the dollar, on all the expenditures of 
the war. 

The currency continued to be further inflated, without any provision for 
converting it into interest-bearing bonds, until by the 30th June, 1864, the 
natural fruits of the mistaken policy became palpable to its advocates. The 
currency and other temporary loans amounted to over $1,125,877,034. At 
this crisis, Mr. Chase, in despair, resigned the Secretaryship of the Treasury. 

Financial Fanaticisnt. 

The administration having created a market for gold, with a constant 
supply^ and demand, through paying interest on bonds in gold and re- 
fusing to receive its own notes in payment of duties on imports, the congres- 
sional majority by joint resolution increased the previously extravagant 
duties to the amount of fifty per cent on all articles indiscriminately, for sixty- 
three days, ending with the 30th June, 1864. The necessary consequence 
was that gold rose rapidly and enormously, or rather that the currency cor- 
respondingly depreciated. Congress, alarmed and anxious to stem the tide 
it had thus set in motion, passed a " gold bill," approved June 17th, 1804 
with the vain hope of checking the depreciation of the currency by prohibit, 
iug time contracts for the sale of gold. Violations of the act were to be pun- 
ished by fines and imprisonment. The ill-advised step only added fuel to 
the flame. Its result was a temporary closing of the Gold-Koora, leaving 
])urchasers at the mercy of individual dealers, and, next, a mania of specula- 
tion, during which gold reached its maximum of 285, the actual premium 
having more than doubled within about two months. The pernicious efiects 



10 

ot tliese oflaring violations of tlie laws of common-sense and political economy 
were so immediately obvious that botli acts were sliort-lived, the gold bill 
being repealed in fifteen days after its passage. 

The protracted duration of the war, so widely at variance from the early 
and rose-colored assurances of the administration, added to the excessive 
issue of paper money, and its great depreciation induced distrust and discredit 
of the Union. Instead of wantonly diluting the currency and wilfully dimin- 
ishing its value, so as to tempt purchasers of bonds, or, in the phraseology of 
the day, to " float the debt" nominally at par, but really far below it, a strong 
specie reserve should have been maintained, and the paper dollar kept as nearly 
as possible at its par value. This would have given confidence, and the people 
or government would have received a full and fair equivalent for the money 
they are compelled to pay. Throughout her recent great calamities, France, 
in pursuance of a policy well worthy of profound attention, never permitted 
her currency to reach a discount of over two and a half per cent, and yet one 
dollar of hard money would have bought nearly three dollars of ours, and 
our bonds were depreciated to a corresponding extent. No other nation has 
ever, during war or any other great exigency, made such distinctions, dis- 
crediting her own currency by persistently recognizing and enacting its in- 
feriority to the precious metals. 

Striking Contrast in France. 

It is little to the credit of the administration, which for the last fifteen 
years has been intrusted with the management of our financial affairs, that, 
although France maintained her paper money, practically at par, during 
the misfortunes which ended in a loss of some of her best territory, 
throughout a terrific civil war, and although she paid a ransom of 
$1,000,000,000 and interest, our " legal tender"' or government paper 
money is yet at a discount, varying from twelve to seventeen per cent, 
and gold once reached a premium of at least one hundred and eighty-five. 
The public debt of France is more than twice as large as our own. Her 
area is more than one third less than that of the State of Texas alone, 
and only about one twentieth part of that of the Union. Her population, 
long nearly stationary, and recently diminished,' was, in 1872, little more 
than thirty-six millions, while ours is now about forty-three millions, and 
is probably increasing at the rate of nearly a million and a half yearly. 
Judging from the past, our national wealth will double in about eight 
years, a rate of prosperity three or four times greater than that of France. 
Yet, with her far inferior resources, and throughout the pressure of almost 
uneqvialed misfortunes, the outstanding issues of the Bank of France, 
not redeemable in specie, never exceeded $640,000,000, and were lately 
$489,000,000, against which , it holds $307,000,000 in the precious metals, 
but insists, as a preliminary to the resumption of specie payments on the 
1st of January, 1878, on a further reduction to the amount of nearly a hun- 
dred millions of the issues lent to the government. 

Our basis of credit being, as we have seen far superior to that of France, 



11 

the contrast between her financial manajrenient and that of the administra- 
tion of this country deeply condemns the lattei-. Acting without fore- 
thoufrht, and in one of those blunders which are sometimes said truly to be 
worse than crimes, it borrowed and dissipated the specie held by the banks, 
and paid away its own, instead of encouraging and keeping a reserve, whicli 
would have made the currency nearly at a par. with coin, and thus have re- 
tained at nearly the same standard the current value of its bonds and the 
articles needed in the war, enormously diminishing the burdens of the people, 
who, through the shameless waste of their credit, now pay, in the common 
standard of the world, debts contracted under the fictitious valuations of an 
irredeemable currency, which the administration, by its example and its laws, 
taught the people and the world to distrust. 

Our government took no efficient or well-calculated steps to keep up the 
value of our note circulation. But this object was the first aim of France. 
Our administration fed speculation, wilfully producing an artificial state of 
things and an appearance of prosperity which deceived many. The Secre- 
tary of the Treasury, with the hope of reducing interest, caused an immense 
depreciation of the currency, and brought upon us the long train of disasters 
from which we have not yet recovered. His was the policy of selling notes 
at half or one third of " their face," for the sake of saving one per cent in 
interest. France, on the contrary, arrested speculation by advancing the rate 
of interest through her bank, and kept down prices, thus encouraging ex- 
ports, and enabling her government to buy at fair prices. Her financial 
policy was the reverse of ours, and the result was more propitious. The 
chief practical example she now gives as an appropriate lesson for the condi- 
tion in which we are placed, is that, by means of an enlightened and mode- 
rately liberal commercial policy for the benefit of the. people at large, and not 
the favoritism of a few, and by maintaining a large reserve of specie in her 
bank, she circulates free of discount a nominally inconvertible paper currency 
to the amount of over five hundred millions of dollars. 

The Panic in 1873. 

Although, owing to the unparalleled natural wealth of our country, the- 
results of defying the positive laws of political economy were long delayed,, 
the time necessarily came when the si)eculations thus set afloat were sub- 
jected to the inevitable test of realizing money from them ; and it was found 
they rested on no adequate foundation. The administration had transferred 
its financial agencies to men who had been foremost in advocating its soph- 
istries and strenuously striven to delude the people by promulgating the 
doctrines that " a national debt is a national blessing," and that " debt is 
wealth." The leading and most trusted advisers and cooperators of the 
government in its financial affairs became the most conspicuous speculators. 
The system significantly culminated in the failure of the houses which had 
been most highly favored and trusted by the administration. A run for de- 
posits almost immediately followed. Tlie sixty banks of Xew-York were 
liable for two hundred millions of dollars totheir depositors. Speculation hadj 



12 

become so rife because the currency was far in excess of legitimate commer- 
cial demands, that, to meet the emergency, the banks had depended on " call 
loans." The bank loans throughout the United States far exceeded those of 
any other date, and the ratio of cash to deposits and circulation was then, as 
it had been for the two previous years, less than at any other time during 
the last forty years. lu New- York, within little more than three weeks, the 
" legal tender " reserve was reduced from thirty-four millions to less than 
six millions. The securities on which the " call loans " had been made be- 
came unsalable, except at ruinous prices. 

Collapse of Uuprofltable Speculations. 

Prominent among the results of the stimulation of a false currency was 
a mania for the construction of railroads, which averaged nearly six thou- 
sand miles for the five years ended in the crisis, against an average of about 
eleven hundred in the seven years ended with 1866. The reaction was so 
disastrous that railroad bonds to the amount of $567,028,639 were in default, 
and considerably less than half of the railroad stocks in the whole country 
paid dividends, entailing losses and ruin on multitudes of innocent sufferers. 
These disasters, though more easily computed than many others and larger 
in amount than any other single class, are probably little more than fair 
specimens of the wide-spread calamities. Many manufactures, notably those 
of iron, cotton, and wool, were suspended or put on short time. Laboring 
men and women were thrown out of work to an extent previously iiuknown 
in the history of our country ; immigration, that prolific source of our pros- 
perity, decreased ; multitudes returned to Europe to spread abroad in every 
land the tidings of their disappointments and deter others from embarking ; 
and the number of bankruptcies in 1873, as also in 1874, exceeded that ever 
before known, except in 1861, the year when the memorable destruction of 
trade and capital was caused by the war. From that time to this, the com- 
mercial confidence necessary to the employment of labor has been impaired, 
and the poverty of the masses and crime have increased beyond all former 
precedent. All the calamities we now endure would have been incalculably 
more general and severe but for the prompt action of the Clearing-House. 
through which, when the crisis occurred, the stronger banks of New-York 
combined to sustain the weaker by combining their reserves of legal-tender 
notes and issuing interest-bearing loan certificates, which were made the 
media for the payment of differences. 

Tlie Law of Finaucial' Pauics. 

It is instructive to note that throughout the history of our country, com- 
mercial panics have universally followed large expansions of the currency. 
By unsettling values and stimulating wild and reckless speculations, which, 
but for a superfluity of the circulating medium, would never be undertaken, 
they draw money away from sound investments which would yield permanent 
profit to those who make them with a view to enriching themselves by ren- 



13 

dering real services to the people at larpe. The national industry has been 
misdirected— a course analogous to waste of time and money misspent by an 
individual. The violent and well-remembered panic of 1837 followed an in- 
crease of !§54,796,320— or from $94,389,570 to $149,185,000— in the circulation 
within the brief period of three years, while during the same period the loans 
and discounts, which practically are for many purposes a part of the currency, 
increased |300,996,261, or from $320,119,441 on the 1st of January, 1834, to 
$525,115,702 on the corresponding day in 1837. Until seventeen years after- 
ward, the aggregate of the loans and discounts of the banks never were so 
great as in 1837r In 1857, the year of the next great panic, they had in- 
creased to §684,456,887, and in the two preceding years the currency had in- 
creased from $186,952,223 to $214,778,822. In 1860, the paper currency was 
$207,100,000, but in 1866, under the Republican regime, the outstanding cir- 
culation had increased to $648,866,000, and on July 1, 1875, to $727,640,588. 
exclusive of over forty-one millions of fractional currency. 

The Experience of Mankind. 

'~°" It may be freely admitted that, at first sight, the theory that paper 
promises to pay are capital, is not without some show of plausibility. Cur- 
rency is the symbol of wealth, and the shadow is frequently mistaken for the 
substance. It is, in fact, when inflated, nothing more than so much " watered 
stock." The value is nominally increased, but the actual property remains 
the same. Sooner or later, the fraud is exposed, but from time to time this is 
again forgotten, and a new era of inflation and delusion begins to end in the 
same way as its predecessors. The experiment has often been made, and as 
often attended by the same bitter lessons. Yet, with new men, the old errors 
are repeated. Happily for mankind, nations are long-lived, seldom dying, 
and in some degree the wisdom gained by one generation filters down the 
course of time to its successors. As, on some points, the laws of finance are 
as positive as those of physical nature, the experience of other countries 
is instructive, 

Financial Principles in England. 

In 1797, the Bank of England began, under authority of Parliament, to 
issue excessive amounts of notes which the London merchants agreed to re- 
ceive at par. Even this could not prevent their depreciation. Parliament 
seconded the ineflectual efforts, and, in 1811, passed the celebrated resolu- 
tion that " the price of gold had advanced, but the value of bank-notes was 
not depreciated" — a complete counterpart to the declaration of one of our 
own secretaries of the Treasury, who claimed to be the author of the legal- 
tender system, that gold had increased in value, but that his paper money 
had not depreciated. In 1814, a British " gold bill" was passed, enacting 
that " the taking of gold coin at more than its value, or bank-notes at less, 
shall be deemed a mis(Jemeanor." It was as ineffectual as our own. The 
trade in the precious metals was conducted as openly as ever, and the depre- 
ciation of the notes continued. No effort was made to enforce the impotent law. 



14: 

The notes remained below par for nineteen years. At last tlie celebrated 
" Bullion Committee," appointed by Parliament to investigate the calami- 
tous condition of British financial affairs and their inconsistency with the 
theories too generally believed, recognized the actual depreciation, and de- 
clared that this was the cause of the general advance in prices. Its main con- 
clusion was that " the country ought to be brought back with as much 
speed as is compatible with a wise caution, to the original principle of cash 
payments, at the option of the holders of bank-notes." The following ax- 
ioms were regarded as incontrovertibly established : 

If gold is at a premium in paper, the paper is redundant and depreciated, tlie premiiun 
measures the depreciation. 

If the inferior currency be removed, the exchanges will be tni'ned, the overflow will 
stop, and, if any vacuum is created, gold will flow in to supply it. 

A better and a worse currency can not circulate together. The worse will dri'se out the 
better. 

The Governor and Deputy-Governor of the Bank of England, the 
Chancellor of the Exchequer, the other highest officials of the day, the Lon- 
don bankers, and the people in general, opposed the sound views of the com- 
mittee, and Parliament itself repudiated them. The nation at large, with 
the exception of a few thinking men, long continued to reassert that the 
large volume of the currency Lad nothing to do with the rise in prices : that 
the bank-notes had lost nothing of their value, and that no restriction of the 
circulation was needed. 

In eight years afterward, the public had been instructed by the logic of 
events, and, with few exceptions — which, however, included the Directors of 
the Bank of England — the truth of the doctrines held by the committee was 
universally admitted. Robert Peel himself, although he had held the 
opinions of the previous Parliamentary majority, and voted with it, became 
one of the most distinguished advocates of the committee, with a mind ever 
open to conviction and a firmness and integrity of purpose which gave him 
strength never to flinch from retracting erroneous views. In opening the 
debate of 1819, he said : 

He was ready to avow, without shame or remorse, that he went into the committee 
with a very different opinion from that which he at present entertained, for his views on 
the subject were most materially different when he voted against the resolutions brought 
forward in 1811 by Mr. Horner, as the Chairman of the Bullion Committee. Having gone 
into the inquiry determined to dismiss all former impressions which he might have re- 
ceived he had resolved .... to adopt every inference which authentic information 

or mature reflection should offer to his mind. 

The views of the committee have long continued to be, in substance, the 
laws of finance in Great Britain ; and for more than thirty years the use of 
bank-checks and other modern means of facilitating payments has been so 
great that there has been no material increase in her paper currency, al- 
though during the same time her commercial transactions have been multi- 
plied fourfold. 



15 

The Warnings of France. 

The depreciation of the currency of France under the regency of Louis the 
Fifteenth has become proverbial. At its origin it had its advocates, but al- 
though France prohibited the use of coin and decreed even the penalty of 
death for those who refused to receive the paper at par, it fell until the equi- 
valent of a hundred dollars in our money would buy only a single pound of 
butter. At last it became utterly worthless ; the people by common consent 
returned to a specie currency ; and the author of the scheme only escaped from 
the country at the peril of his life. 

Bitter Experience of Austria. 

Austria has been slower to learn, and her disasters have been prolonged 
to a much more recent date. Sixty-five years ago, her currency was so far 
reduced in value that she issued " redemption notes," in which it was to be 
" redeemed " at the rate of three to one. This having failed, she over and 
over again, under new names, such as " Viennese legal tender " and " an- 
ticipation notes," vainly sought to provide substitutes for a metallic stand- 
ard. In 1873 she suffered from a panic bearing a close resemblance to our 
own. After her war of 18G6, large issues of paper money were made, which 
led to a belief in the abundance of capital and to speculations of all 
kinds. The government itself gave aid by guaranteeing dividends on va- 
rious railroads. The market was glutted with an immense quantity of so- 
called securities, in which it was for the time impracticable to distinguish 
between the good and the bad. The inevitable crash ensued. As in this 
country, the leading speculators were the first to suspend. Their example 
was soon followed by a multitude of smaller operators. Even the strong 
houses were shaken. The Bourse was closed to prevent violence among its 
more adventurous members, some of whom committed suicide. 

Events in Early American History. 

In the yet brief history of the United States and Canada, the same lesson 
has been no less imperatively taught. I pass over the examples to be found 
in the records of the individual States and colonies. Franklin himself, early 
in the Revolutionary War, warmly approved the issue of bills " on the faith of 
the continent." One member of the Congress, who seems to have been alone 
in his views or in the courage needed to avow them, urged taxation, but was 
bluflfed by one of the almost unanimous majority, who, in a spirit of which we 
have conspicuous examples in our own time, asked, " if he was to help to tax 
the people, when they could go to the printer's office and get a cart-load of 
money." The currency decreased in value uhtil monstrous sums were need- 
ed to buy a cow or procure a frugal meal. It became exchangeable only at the 
rate of a thousand dollars for one sound dollar. This too in spite of penal 
laws to enforce the impracticable wishes of Congress. The historian of the 
time savs : 



IG 

" Wealth was accnmulated by the dishonest multitudes of contractora, and the many 
defraaders of that unhappy period, while more deserving men felt that it had been plun- 
dered from their own coflEers for the aggrandizement of such people." 

No tliouglitful statesman ever overlooks the precedents establishing the 
positive conclusion that wherever legislators have attempted by penalties to 
compel the people to take irredeemable paper at par with coin, the laws of 
the strongest alike with the weakest governments have signally failed in 
enforcing their wishes. 

Responsibility of tlie Republicans. 

There is no more striking instance of the forgetf ulness of yet recent history 
and the superficial consideration, too often with the most deplorable results, 
given to the affairs which concern us all, than the impression on the minds 
of some candid men, and the loud and reiterated assertions of others, that the 
Democrats are the party of inflation, and the Republicans are the most reliable 
supporters of a sound currency and a return to specie payment. The tradi- 
tional policy of the Democrats is that of a currency redeemable in hard mo- 
ney, and will be so to the end. Individuals are to be found who on other 
points agree with them, but believe in the pernicious doctrine of an irre- 
deemable currency. They are not the party, and misrepresent its well-known 
and hitherto universally admitted tenets. On the other hand, the Eepublicans, 
from the beginning of their possession of power to the present time, have uni- 
formly practiced the fraud, and attempted to justify it, until their efforts 
were no longer availing. They took from the banks the power of paying in 
specie, are responsible for the whole existing system of paper money, and 
their leaders have wrangled among themselves for the honor of ^its author- 
ship. 

Some, although holding general allegiance to the Republican party, were 
so far patriotic and wise as to warn it against the cause from which most of 
our financial evils sprang, and have since wrung from it spasmodic promises 
of reform which have been as often broken, thus proving the utter want of 
reliability in the Republican organization. 

There are many conspicuous instances of this practical deception. One of 
them was the first act of Congress approved by President Grant after his in 
auguration. In clear and terse words, it explicitly " declared that the faith of 
the United States is solemnly pledged to the payment in coin or its equiva- 
lent of the United States notes," and that Congress " pledges its faith to 
make provision at the earliest practicable period for the redemption of the 
United States notes in coin." The hopes thus given were fallacious. The 
congressional majority arrested the contraction begun by McCulloch when 
secretary of the Treasury, and supported the illegal inflation by Boutwell and 
his successor. Five years ago, in 1870, the premium on gold fell to eight 
and a half per cent, and 'yet it was recently seventeen and a half. During 
this period, under Republican control, paper money has receded further from 
approaching to an equalization with gold. 



17 

In the last session of Congress, the Rcjuiljlican party again repeated its de- 
lusive pledges, by announcing that in four years specie payments should be 
renewed, but accompanying the resolution by no adequate measures for ful- 
filling the promise previously so often broken, and their chief financial leader 
in the Senate repeatedly refused to state what would be the operations of the 
bill he introduced. Such acts are plainly nothing more than attempts to de- 
ceive the people, and by seeming compliance circumvent their efforts for the 
return to an honest and substantial currency. 

Whatever show of reason existed during the war in favor of an inflated 
paper currency now no longer exists, but the supporters of a sound and fixed 
standard of value have again and again been outwitted, betrayed, and outvot- 
ed by those who falsely professed to be the friends of redemption, and in co- 
operation with weak, though more sincere men, who, fearful of injuring their 
party, and preferring its life to the claims of their country, let " I dare not 
wait upon I would," have made the promise to the ear, but always broken 
it to the sense. The party is the same now as ever, whatever may be the 
views and wishes of some of its members. 

Kecessity of a Fixed Standard. 

Stripped of the sophistries with which it is frequently surrounded, the 
necessity of a fixed standard of value in all the commercial and monetary 
affairs of the nation is so clear that he who runs may read it. Paper money 
may be freely used ; checks or bills of exchange, aided by the railroad, 
telegraph, and post-oflSce, may transact nearly all such business of the 
country as is on a large scale, and tend to prevent any exorbitant rate of in- 
terest ; but it is essential that all these means should simply represent one- 
universal and uniform standard. Without this guard, they become uncon- 
trollable and unsound — extortionate taskmasters instead of good and faith- 
ful servants. 

In the minds of many men affairs of state are surrounded with a confusing 
mystery, as if the principles of ordinary facts and common-sense could not 
be applied to them. Yet it is plain that trade in grain of any kind 
■would be placed under such enormous disadvantages as to render it almost 
impossible if the bushel measure of to-day might be larger or smaller to- 
morrow from causes the farmer or merchant could not foresee and alto"-ether 
independent of their control. The dealers in textile fabrics, and in land itself, 
would be in strange predicaments if the yard and the foot were subject to- 
great and frequent variations, and might represent at one time little more 
than a third of their measure at another. Yet the^obstacle which has been 
thrown in the way of the trade and prosperity of the country is almost exactly 
of the same nature. The " legal tender" dollar at one time was worth little 
more than a third of the true dollar, and continually changes from day to- 
day, making trade uncertain and values of all kinds doubtful. No man 
knows when he rises what they may be that morning, or when he goes to his- 
place of business what they may be before the sun sets. It is an established 
fact that the greatest possible certainty of value is attainable only by en- 
2 



18 

forcing tlie standard of the precious metals ; tliey become the property of 
whatever nation or individual will give most for them. Their portability 
and the universal recognition of their value throughout the world make 
them the natural and least fluctuating medium of exchange, and arbitrary 
legislation has been and seemingly always will be unsuccessful in discover- 
ing or enforcing any stable substitute for them. 

The people are vitally interested in a return to a specie basis. Tlie paper 
they now receive for services, daily toil, and general business purposes, is 
worth only eighty-five cents on the dollar, through its depreciation to that 
extent below gold value, which they pay for nearly all the articles required 
for daily use. No sophistry can long continue to delude them, while a vigi- 
lant press penetrates the remotest parts of the country, into a belief that 
such depreciated and inconvertible paper money is the best currency. 

The notion of many of the advocates of expansion is vaguely that it 
would be substantially a distribution of money among the masses at large ; 
but it is; in fact, one of the most seductive methods of depriving those who 
depend on their labor and industry of their just reward, placing colossal for- 
tunes in the hands of a few, to whom it gives a lion's share of the little the 
people individually possess, taxing their labor and that of their descendants, 
and thus endangering even the republic and the liberties of the people. This 
has been the uniform experience of mankind, and it is aptly illustrated by 
the history of our country in the last fifteen years, during which we have had 
an irredeemable circulation, and when, while wealth slipped more rapidly 
than ever into the hands of speculators, the number of bankruptcies exceed- 
ed those of any former term, £yid poverty, distress, and crime have made 
alarming progress unprecedented in the history of our country. 

Tlie Present Time is Opportune. 

The present time is the most opportune we have had, since inflation 
began, for making vigorous preparations for specie payments. The premium 
on gold has been reduced by commercial causes, apart from legislation, 
from 185^ to 12 or 17 per cent, thus indicating that the remaining steps 
to gold at a par rate with notes can gradually be safely retraced, by no 
extraordinary amount of statesmanship, provided it is sincere and persever- 
ing. Since the war began, the circulating medium has increased three 
times as fast as the population. In New- York, the accumulation of money 
and the low rate at which it may be had are unprecedented ; but few 
borrowers whom the capitalists will trust are to be found. Low as the rate 
of interest throughout the world has long been, money was for several 
months cheaper in New- York than in the great cosmopolitan market of 
London, the difficulty of our capitalists having been to find profitable 
employment for their currency at home. A similar state of affiurs prevails, 
though in a minor degree, at Chicago, Cincinnati, and the other great 
financial centres of the Union. Even the bill passed June 20th, 187-4, with 
the intention 'of increasing the currency, has proved, as clearly as the 
thermometer shows temperature, that more is not needed, and that there is 



10 

a redundancy above tlie wants of the people. Under its operations, and 
after allowing for tlie new circulation, there has been a net contraction 
of the paper currency to the amount of over fifteen millions, within a 
year. Banks are uuable to employ their money at fair profits. The legal 
tender and other reserves held by the banks of New-York at the time of my 
writin<T exceed .$S2,000,000. The abundance of money tliroufjhout the civi- 
lized world afifords peculiarly favorable opportunities for funding or obtaiii- 
ino- specie and foreign credits, which, to a certain extent, are identical wiiii 
each other. The futility of expanding the currency was signally demonstra- 
ted when the Secretary of the Treasury, during the panic of 1873, issued, 
without authority of law, $20,000,000 of notes, in the vain hope of relieving 
the money market. These notes did not enter at all into the general circu- 
lation, but were hoarded by savings-banks and trust companies, as were 
those which had been already withdrawn from the banks of discount 
and deposit. Large exportations of grain to Europe from this side 
of the Atlantic are expected. Our imports have enormously shrunk. The 
people themselves are more than usually free from debt ; and last, but 
not least, is the encouraging fact that their minds have been long and 
carefully prepared by an increasingly intelligent press, never before so 
sound and well-informed on financial topics, to take more than superficial 
views and look beyond the delusions of what is merely immediate and 
temporary to that which, though slightly more remote, is permanent and 
real. The government, at present unable to redeem its promises to pay, 
may never again have so good an opportunity of beginning the process of 
exchanging its bonds at a low rate of interest, or the national banks of 
laying up the reserves of specie, on which, in their hands, under the 
wholesome law of free competition, tlie restoration of prosperity depends. 

On the other hand, if the policy of the expansionists could be followt-d, 
the return to specie payments and the successful funding of the debt, long 
ago due on demand, but yet unpaid, will become more and more difficult, 
until, as we have seen has repeatedly been the case in other countries and 
our own, the control of legislation will be lost, broken promises will be 
renewed only by making more of them, and wide-spread disaster, misery, 
repudiation, and national dishonor will ensue. We have reached a point 
where any expansion of an irredeemable currency means its indefinite 
increase, and are approaching that crisis against which the united wisdom of 
many generations, warns us, in the maxim that the descent to destruction is 
easy, but the labor and work of retracing our steps is dilficult if not 
impossible. 

\^'e have now arrived at the period when inflation no longer inflates. 
In the body political and financial, as in the human body, there is a point 
where the power of stimulants ceases and can no longer prevent collapse. 
This is the law of all serious panics and their results. There is a great 
shrinkage in business, and no important revival can be expected until a new 
financial system which will deserve and receive public confidence is fairly 
begun. In proportion as there is a cry for inflation, capital, proverbially 



20 

timid, seeks for safety, withdraws from enterprise, and refuses to employ 
labor. Until the future policy of tlie orovernraent is permanently settled, 
there will be no real renewal of the commercial and general prosperity of 
the country. 

The Increase of Currency. 

Some are under an impression that the currency has already been very 
largely contracted. In support of this theory, reference is made to the tem- 
porary loans, certificates of indebtedness, etc., existing in 1865, and after- 
ward funded. These were, in no proper sense, the currency of the country. 
If they were, they would simply prove that contraction on a vast scale can 
be rapidly made without injury to the people, the j^anic not having taken 
place until eight years afterward, and the Secretary of the Treasury, in his 
report of November 30th, 18G7, having been justified in saying, " Wliile this 
has been accomplished, there has been no commercial crisis, and (outside of 
the Southern States, which are still greatly suffering from the effects of the 
war and the unsettled state of their industrial interests and political affairs) 
no considerable financial embarrassment." The same testimony was repeat- 
ed in the report of the following year. [It will be seen, by the figures already 
presented, that, instead of contraction, an increase of seventy-eight millions of 
circulation occurred between April 1st, 1806, and July 1st, 1875. 

When Can we Resume * 

The Act of January l-ith, 1875, passed by the last Republican Congress, 
under the previous question, cutting off all debate, has done more than any 
other single measure to produce expansionists. It has created alarm in 
business circles, and given to inflation an importance it could not otherwise 
have attained. The impression is that if the act is rigidly enforced, the con- 
traction of the currency will of necessity be so rapid as to produce again 
widespread disaster, and such undoubtedly would be the case if resumption 
were really enforced at the date named for it, January 1, 1879. Fortunately 
for the people, a new Congress intervenes, and a modification of this law will 
no doubt be effected, more iu consonance with the true interests of the 
country. The time when paper will be at jiar with gold is so far remote 
that not a few of the leading statesmen who most desire it despair of living 
to see their hopes fulfilled. I express only the general sentiment of the most 
sagacious financiers in saying that the consummation cannot be reached for 
many years. 

How to Resume. 

The expediency of a return to specie payments may now be taken for 
granted. The next step for the people and Congress is the consideration of 
the best means for accomplishing it with the least possible disturbance of 
existing interests. On this point, there must naturally be a difference of 
opinion, but there will ultimately be no lack of unanimity after due dis- 
cussion in a candid and deliberative spirit. I have shown that there has 
been during the past year, notwithstanding the power to expand under ex- 



21 

istiu» laws, a voluntary withdrawal of tlie circulation to the extent of about 
$15,000,000 ; it is believed that this process will continue by reason of the 
excess now held by the banks for which there is no employment. If, in ad- 
dition to this, the government should autliorize the purchase and cancellation 
of some moderate amount, say $1,000,000 per mouth, of the len;al-tender 
notes, and authorize the Secretary' of the Treasury to sell five per cent bonds 
of the United States, to provide funds for that object, the first great step 
would be taken toward resumption, without injury to the financial and 
business interests of the country. Under the recommendations of Mr. McCul- 
loch, when Secretary of the Treasury, contraction on a larger scale was be- 
gun, but Congress, fearful of the effect, withdrew its assent. I propose that 
the rate and method of contraction shall be so gradual that Congress can 
have no excuse for again intervening. Rigid adherence to such a course 
would indicate a determination to return to a sound basis ; the absence of the 
infenor cnrrctiry would be f/radually supplied by the superior ; the problem 
as to the method of resumption would be solved, and the system work itself 
out by a natural process, while individuals and the banks would have ample 
time to prepare for a new condition of affixirs. Business being thus adjusted 
upon the new basis, confidence would return, and with it prosperity would 
soon prevail. The act of January 14th, 1875, should be modified in conform- 
ity with this view. 

3Ioie "Legal Tender" Dlegal. 

Gold by the Constitution of the United States is a legal tender, and, as a 
necessary consequence, the standard of value. That instrument gives no 
authority or power to any department of the government to issue legal ten- 
der paper, or a currency payable on demand. The only ground upon 
which it was issued during the civil war was that of seeming necessity, it 
being supposed that the existence and supremacy of the government were 
involved. Without entering into the conflicting decisions of the Supreme 
Court of the United States, it is sufficient to know that they indorsed the 
issue of legal tender, but only as a war necessity. It necessarily follows it 
could not otherwise be legally issued. We now find many demanding a 
withdrawal of the bank-note circulation, and a further issue of legal tender. 
Under a proper construction of the C(ln^^titution, this is impossible, and, as 
Democrats adhere to that instrument, they can not for a moment contend for 
such a proposition, and if they did, their efforts would be unavailing. 

When the legal tender issued by the government is withdrawn, it must 
cease to issue more or any paper currency whatever. 

Beware of Arl)itrarj' Power. 

The right to control the financial affairs of the country by increasing 
the circulating medium at his own will, is too dangerous a power to be lodged 
in the hands of the Secretary of the Treasury. That high ofhcial is seldom 
chosen for his adaptation to the special duties devolved upon him. He may 
be one who has attained political rank through his merit as a lawyer and 



99 

nil 

speaker, wliile, according to his own frank assertions, lie is profoundly igno- 
rant of tlie simplest facts and principles in modern finance, and may be in- 
duced to take a course exactly the reverse of his own most cherished convic- 
tions. Sometimes the Secretary of the Treasury may be a mere partisan 
intriguer or profoundly ignorant tool. At another time, the holder of that 
office may be a man of sterling principles, Sound doctrines, and pure charac- 
ter ; but, in the changes of parties, there can be no certainty of this ; while, 
although the evil may never again reach the criminal magnitude to which 
it has attained under a Republican administration, we may be sure that so 
long as unwarrantable power is placed in his hands, he will continually be 
interviewed by astute speculators, and that all possible means of wealth and 
perverted intellect will be employed in artifices to persuade him to use his 
power for the promotion of special and individual interests, rather than for 
the public good. Hence, the aim of all good citizens should be to separate 
the government from the business of banking. It can not remain in the 
hands of the government without creating such centralization and influences 
as are hostile to the spirit and perpetuation of republican institutions. 

Upon the withdrawal or redemption of the legal tender, and the resump- 
ion of specie payment, the issue of new currency should be practically free 
to the banks to any extent on the deposit of national bonds as security for the 
circulation. Under these conditions, there would be free trade in money. 
Tlie law of supply and demand would solve the question of the currency, and 
the largest practicable an\ount of benefit the banks can render would be at- 
tained, while the circulation would be kept within moderate limits, and gra- 
dually attain the true and honest standard of the world. As one of the ulti- 
mate results, the time may come when their notes, amply secured by govern- 
ment bonds, in a proportion which will assuredly command specie, may be 
accepted by the government in payment of its dues, and re-issued for its cur- 
rent expenses. 

Payment of the National Debt. 

Notwithstanding the small amount received for the national debt, the 
honor and credit of the nation require that its interest and principal shall be 
paid in coin. The life of the nation was preserved, and an impetus which 
has generally been recognized was given to the great cause of self-govern- 
ment. Bat the further extinction of the debt should be suspended until a 
return to specie payment. The people, without regard to party, united with 
great promptitude and bravery in the preservation of the Union, and submit- 
ted to the most exorbitant taxation and exactions without a murmur. When 
the war was over, it was generally expected that heavy taxation would cease ; 
bat, instead of this, the burdens have continued, and seven hundred mil- 
lions of direct and indirect taxes, besides the needlessly exorbitant and pro- 
fligate cost of collecting them, have been taken from the people to diminish 
a debt, payment of which could well have been postponed until the financial 
condition of the country would better have enabled our citizens to meet it. 
The determination of tlie peoj^le to pay the debt, the known magnitude of 



23 

our resources, aud the rapidity of their development, are such, that after the 
resumption of specie payment, its gradual reduction may be anticipated. 

Xeed of a Revenue Tarid'. 

The discussions which have engaged so large a share of public atten- 
tion, as to the opposing doctrines of free trade and "protection," are now of 
diminished importance. The taxation needed for the expenses of government 
and interest on the national debt is already so burdensome that argument 
as to the expediency of levying further taxes on the many, for the benefit of 
the few, should by common consent be postponed. Revenue with the least 
possible injury to the people is the proper object of the tariff. This was 
avowed in the first revision by the Republicans, in ISGl, but under this dis- 
guise, the Congressional majority, through the influence of special interests, 
made the income of the government a secondary affair, needlessly increased 
prices, and made almost impossible an exchange of various articles we were ac- 
customed to export, besides impeding the exportation of many others. 

In numerous instances, the duties are so heavy that revenue from tliern is 
almost entirely destroyed. The duty, on many articles absolutely neceseary, 
is practically prohibitory while the people are compelled to pay enhanced 
prices to the manufacturers. Thus, on blankets, the duty collected in 1873 
was $0,337, not far from the whole amount of the importations, which was only 
$7,940. The total consumption of blankets is credibly estimated to have 
been $20,000,000, of which, through the prices created by the tariff, the con- 
sumers paid to the manufacturers .$18,000,000 more than they would have 
paid in the open markets of the world. The prices of tools and simple ma- 
terials used by mechanics are increased in the same way. The duty collect- 
ed on saws was $7,630,on importations to the value of $19,033, forcing the 
payment of $1,200,000, under pretense of revenue and protection. Under the 
same system of favoritism and prohibition, our builders and others who use 
wood-screws were needlessly forced to pay $1,400,000 for the benefit of a 
few persons especially interested in their manufacture. The burden, of course, 
falls ultimately on the citizens at large. Abuses of this kind have gone on 
so long unchecked and encouraged that the financial leader of the majority 
in the House of llepresentatives does not hesitate to denounce the ■whole 
system of taxation as controlled by the intrigues of rings and cliques, with- 
out regard to principles or the interests of the people.. Obviously the tariff 
needs thorough revision and reform. 

Encouragement to Home Industry. 

So long as our observation of the prices we are compelled to pay on the 
articles we use or consume is confined to our own country only we lose sight 
of their injurious effect. When we compare prices in our own country with 
those of the world at large, we ascertaiii our condition with tolerable pre- 
cision. The competition to which our shipping is subjected on the ocean, in 
trade with other countries, afiurds a strong illustration of this rule. Before 



24 

I860, 75 to 80 per cent of our foreign commerGB was in American vessels. 
The proportions are now almost literally reversed ; over 72 per cent being 
carried in tlie vessels of otlier countries. Of our wliole foreign carrying trade, 
little more than one fourth is under our own flag. The earnings of the 
trade were recently estimated by the Secretary of the Treasury to be more 
than a hundred Inillions of dollars yearly. In 1873, the amount paid to 
foreign steamships for freight and passage money, was $134,742,441. When 
we consider that stfch sums are paid annually, and that our ship-owners, 
sailors, and others formerly enjoyed the pre-eminence and chief profits in 
a trade now so nearly monopolized by foreigners, and of which our citizens 
are deprived by what are termed " protective laws," it is plain that a lib- 
eral and comprehensive change is needed in legislation. Upon similar prin- 
cii^les, judiciously applied, a strong stimulus could be given to the exports 
of many manufactures, and the additional labor employed in their produc- 
tion would increase the demand for agricultural products, and the home 
consumption of those manufactures to which the condition of our country is 
specially adapted. The exorbitant rates of many duties are not only unfair 
to the public at large, and especially so to the farmer, the prices of whose 
productions are mainly regulated by those in other countries, but create 
temptations which have been amply proved to demoralize the public ser- 
vants, and by encoviraging smuggling and fraudulent valuations to an unpre- 
cedented extent — asserted by a leading Republican to be 67 per cent— wring 
liigh prices from the pockets of the people, for the benefit of criminals, 
while the government receives comparatively small returns. 

Principks of the Britisli Tariff. 

The theory of protecting and encouraging industry by high duties, levied, 
in the main, from the industrious, has long been tried, while no legislative 
efforts have been made to attain the same object by the judicious applica- 
tion of the lowest taxation consistent with the needful revenue. In this re- 
spect, the cause to which Great Britain is indebted for her manufacturing 
and commercial prosperity is well worthy of study. While our tariff levies 
duties on nearly two thousand five hundred different and distinctly enume- 
rated articles or classes of articles, the whole British tarifl" includes only four- 
teen ; all others are supplied to her consumers free of duty. Although we 
can not yet attain the ^ame simplicity, it would be wise to take steps in that 
direction. A better and more moderate tariff, while yielding an ample 
revenue, would give our home producers many advantages. It is calculated 
that by such a change, aided by a sound currency, our manufacturers would 
be enabled to supply the agricultural, commercial, manufacturing, and other 
consumers of their goods, at rates varying from 25 to 50 per cent lower than 
at present. They would share in the general relief of the people, and their 
business would rest on a solid basis. It is worth while to try the experi- 
ment of giving every man who has a dollar to spend, the largest possible re- 
turns for it. 



25 

An American Continental Sjstcni, 

Concurrently with a tariff reform, whicli would encourage our manufac- 
turers and commerce and relieve our an;ricultural interests, steps should be 
taken, in view of extendinj^c to Canada, Cuba, and Mexico, the freedom of 
trade which already exists throughout the United States from the Atlantic 
to the Pacific, and from Canada to our Southern boundaries, and is univer- 
sally admitted to be indispensable to the prosperity of our people. There is 
no reason why a free exchange of the products of labor between our own 
people and those of neighboring countries would not be at least as advan- 
tageous to all the parties concerned, as that between the citizens of our 
A'arious States is to them. On our Northern and Southern frontier, the full 
commercial and manufacturing development of our territory has been great- 
ly retarded and injured by the mutual but unnatural prohibition of free 
trade with neighbors who live close to our own doors, although under other 
governments. 

Many of our statesmen, instead of attempting to confer these great 
boons on their country, fixed their eyes on a frivolous extension of trade 
with' small remote countries, with which, our dealings must always be 
insignificant. A commercial treaty was lately made, by a triumphant vote, 
with the Sandwich Islands, while the opportunities of establishing similar 
relations with larger and nearer countries were entirely neglected. Yet last 
year, our whole trade with those islands aniounted to much less than two 
millions of dollars, while, even under the present oppre.ssive restrictions, our 
trade with the Nortli-American British possessions, Cuba, and INIexico, was 
over a hundred times as large, having exceeded two hundred and eight mil- 
lions, and might, by a removal of commercial barriers, be extended to tlouble 
that amount. 

Extension of Trade with Canada. 

During the last session of Congress, proposals for the extension of our 
trade with Canada received considerable attention from the press and many 
commercial bodies in this country and the Dominion, and were brought be- 
fore the Senate. Objections were made against the ])roposed treaty, but no 
serious effort was made to carry out a piinciple undoubtedly advantageous 
to both countries, whatever the merits of the particular measure may have 
been. The magnitude of the question is little understood. The British 
North- American possessions contain an area of three million, four hundred 
and seventy-eight thousand, three hundred and eighty square miles, more 
than is owned by the United States, exclusive of Alaska, and not much less 
than the whole of Europe, with its family of nations. Their population is 
now not far from five millions. 

The best solution of the subject would undoubtedly be the adoption of 
an American system of commercial union similar to that of the (lerman Zoll- 
verein, under which duties are collected only on the outside frontier of the 
States which are parties to it, the revenue is equitably divided, and trade be- 
tween them is as free and iintrammeled as among the several States of our 



26 

own Union. There would be an enormous and immediate saving in tlie 
abolition of the frontier custom-houses between the people of both countries, 
the extension of trade would have a most favorable influence on the prospe- 
rity of all the parties to the arrangement, and, through the renewed impalses 
and life thus given trade with other countries would be extended, with 
wide-spread benefits to the world at large. 

So long ago as 1864, a majority vote of the House of Representatives tes- 
tified that it was decidedly in favor of amending and extending the provi- 
sions of the former reciprocity treaty, in consonance with concurrent resolu- 
tions adopted by the Legislature of the State of New-York, and expressing 
a strong desire for the removal of all artificial barriers to trade between the 
United States and Canada ; but the war intervened, and no further progress 
was then made. From that time to the present, notwithstanding the nume- 
rous appeals to Congress by various commercial and other bodies of the high-, 
est character, the subject has b.een neglected and not even fully discussed. 

The best practical course appears to be the appointment of efficient 
commissioners by both countries to ascertain whether a customs' union can 
be established, and, if this is impracticable, to ascertain by careful scrutiny, 
item by item, in what articles reciprocally free trade between the two coun- 
tries would be mutually advantageous. Our people would doubtless profit 
by being enabled to buy lumber of all^kinds free of duty. Oar supplies of 
it are rapidly diminishing ; it is needed on every farm and in every house, 
and is the basis of many articles for export and home consumption. On 
the other hand, the exportation of many of our manufactures to Canada 
might be greatly increased if admitted into that country free of duty. 

Unsatisfactory Relations ivith Cuba. 

Our commerce with Cuba has long been in a very unsatisfactory con- 
dition. Our importations from her last year amounted to the large sum of 
$86,373,406, while our exports of domestic origin to her were only $19,597,- 
981 ; the balance of $66,674,485 — except less than two millions of foreign 
goods exported from this country — was necessarily paid in gold or its equiva- 
lent in bills of exchange on other countries. No point in our foreign rela- 
tions is more worthy of attention than this. The vast sum thus paid yearly 
to Cuba would soon enable us to resume specie payments if we could pay 
it in the products of our industry in other forms. It is believed that 
much might be done in this direction by an honorable treaty with Spain, 
tending not only to the commercial benefit of all jiarties concerned, but to 
terminate the unfortunate relations between her and Cuba by harmonizing 
their mutual interests. 

Oiir Trade with Mexico. 

The people and government of Mexico, like those of Canada, are un- 
doubtedly desirous of wider commercial intercourse. Our trade with them 
is certain to attain gigantic proportions at no distant day. The same gen- 
eral principles which should regulate our policy with Canada should also 



27 

guide us in our relations witli Mexico. We should not covet tlieir territory 
but desire tlieir trade and the harmonious development of our various re- 
sources, leaving lis free from the responsibility and burden of managing 
their affairs, and, least of all, should we, by money wrung from the 
pockets of our already overtaxed citizens, endeavor to annex foreign terri- 
tory, or any part of it, and give others a share in governing us. The cer- 
tainty of an economical, free, and pure government should be the attrac- 
tion on which we rely. Admission into the Union should be regarded as a 
privilege, not as a matter of bargain and sale. 

The trade we might soon have with Mexico is of incalculable impor- 
tance. She is capable of supplying our rapidly increasing population with 
tropical productions for centuries to come. Last year, our imports of the 
products of the sugar-cane from Cuba alone amounted to $75,738,448, while 
those from all other countries were only $17,120,755. Yet the supply of 
these necessary articles from Cuba is liable to be cut off almost at any time 
by the emancipation of the slaves, through whose labor it is produced. The 
same immediate results which followed emancipation iu the other West- 
Indian islands must be expected in Cuba. It is, therefore, advisable that, 
with wise foresight, we should provide other sources of supply. Mexico 
alone can furnish them, and she can do so abundantly. Her population al- 
ready amounts to 9,000,000, being six times as large as that of Cuba, which 
is 1,500,000— a fair index to the probable consumption of our products by the 
people of the two countries under similar conditions of trade. Hitherto her 
industrial development has been materially crippled by the absence of cheap 
transportation for her products from the rich lands of the interior. Railroads 
are now removing this obstacle, and their construction affords the best 
opportunity that wgl ever arise for us to open a mutually beneficial exchange 
of the products of the industry of our people for many articles now of prime 
necessity, and which we can not advautageouslyraise in our own country 
but are abundantly produced in Mexico. 

Under a good commercial treaty or customs' union with Mexico, many 
years would not elapse before her territory would be intersected with a net 
work of railways carrying prosperity into every part, the amount of our 
productions taken in exchange for hers would far exceed the enormous sum 
now paid annually to Cuba, and the difficulties arising from the Libra 
Zona or Free Belt on our frontier would immediately be settled ; while the 
more remote political results which would arise from the increased inter- 
course of the people of both countries, tlirough the development of their 
natural commercial union, must be obvious to all thinking men. 

It should also be remembered that by the adoption of an American com- 
mercial system, we should not only supersede the demand upon us for the 
specie or bills of exchange now paid for tropical productions, but become also 
the intermediate carriers and factors for the trade which would be indefi- 
nitely extended between our neighbors in Canada on the north and those in 
Mexico on the south. The Canadians, by their recent proposals for a treaty 
of trade with the United States, and the Mexicans, by the liberal concessions 



28 

tlieir government has made, providing for a railroad nearly seven hundred 
miles in length, from the city of Leon to connect with the Tuternalional 
Railroad of Texas, and thus with the railway system of the United States, 
prove their apjsreciation of the benefits to be derived from enlarged commer- 
cial intercourse with our citizens, who, we may be sure, will not transact 
business if it is not to their profit. 

Best Policy toward the South. 

The rule that "honesty is the best policy" is, perhaps, even more ob- 
\dously true in its application to the treatment of the South than to affairs 
of the tariff and. finance. The manufacture of false reports of Southern 
outrages has run its course, been detected and exposed, and is no longer 
profitable to the seekers of Northern favor. The misgoverument of our 
Southern fellow- citizens has become so palpable that not a few of the Re- 
publicans themselves see it is not so much the Southern people as the party 
in power that needs reformation. One of their chief leaders acknowledges 
that " it is not the disease but the doctors that we ought to examine — it is 
not the illnes.? but the medicine that does the harm." The administration 
has steadfastly folloAved the course of those disreputable practitioners who 
administer drugs to drive a patient into madness, and keep him in confine- 
ment under false certificates, knowing that their occupation and fees will be 
at an end when his actual condition is known. 

Considered only as a matter of self-interest, the prosperity of the South 
is of incalculable importance to the Xorthern people. One of the great 
causes of stagnation in the Northern manufactories is the impoverished con- 
dition of the South. According to the census of the United States, the pro- 
duction of the great staple of cotton, so important for honie use and in our 
foreign exchanges, shrank from nearly five millions and a half of bales in 
1860, to little over three millions in 1870. The production of tobacco de- 
creased in far larger proportions. These losses are not counterbalanced by 
any increase in other articles. The production of the cereals decreased forty- 
four per cent, and the value of live stock twenty-six per cent. All this is in 
strong contrast to the prosperity of the previous decade. 

Carpet-Bag Spoliation. 

Part of the evil influence of the infamous adventurers who have been 
aided by the civil power of the administration and the army itself, and have 
united with the managers of their party elsewhere to use the colored vote, 
first to control and rob the South, next to aid in governing and despoiling 
the people of the North, is clearly shown by an examination of the debts 
and liabilities incurred in the Southern States since the close of the war. At 
that time, the amount in Georgia and Texas was merely nominal, but on 
January 1st, 1872, as shown in the Ku-Klux Report of that year, it was over 
fifty millions in the former and twenty millions in the latter State. Since 
the war ended, up to January, 1870, the debts and liabilities of the various 



29 

Soutliern States grew from eighty -seven millions to three hundred and sixty- 
two millions — a net increase of over two hundred and seventy-five millions. 
This vast sum has mainly been squandered or stolen, not fairly invested for 
the benefit of the people to Avhom it belonjred, and the true value of whose 
property during the ten years between 1800 and 1870 was diminished to the 
amount of over two thousand millions of dollars, as shown by the census 
of the United States. 

The indignation of the Southern whites against the spoliation to which 
they were thus subjected, by the aid of the administration and congressional 
majority, was further aroused by the federal office-holders, who, with their ad- 
herents and the support of their party at Washington, controlled elections, 
and tampered with the courts and usurped their power. Legislatures were 
seized, needless and obnoxious acts passed, and nothing was neglected to 
foster and perpetuate enmity and strife between the two races, A regard for 
the real interests of the colored men which could only be promoted by advanc- 
ing his sense of political justice, in harmony with the interests of the whites, 
was no part of the schemes. The old proverbial game of oppressors, to divide 
the people against each other, so as to conquer and rob them all, was never 
more recklessly pursued than in tlie too successful efforts to set race against 
race, and the North and South against each other. The beneficial restoration 
of concord and the Union can only be effected by fair dealing and constitu- 
tional liberty. 

Directly injurious as the impoverished and dishonestly taxed condition of 
the South is to the Northern people, its dangers are secondary in importance 
to the results which must follow to the people of the whole Union if the con- 
tinuation of military interference and despotism, such as have been conspicu- 
ously exemplified in Georgia, Louisiana, and Arkansas, is permitted. All 
simply local and domestic matters must, under the constitution, be left to 
the people of the States. At last, the ])ractices of the Republican party are 
echoed in the speeches of its leaders, who attempt to justify the progress of 
centralization — a system absolutely contrary to all free and especially to all 
really republican government. 

The Political Color-line. 

One of the first objects in the Democratic Southern policy should be to 
destroy the political " color-line," which it has been the constant aim of those 
who had no desire for the welfare either of the white or colored race to in- 
tensify to the utmost. If it should be perpetuated, and the colored people 
continue to be made the tools of those who maintain corrupt government, 
both at the South and North, the ultimate result will be especially disas- 
trous to those who, in comparison with the rest of the population of the 
Union, are in a small minority. Their i)ractical welfare can best be pro- 
moted by such a general prosperity of the South as will give them a fair 
day's wages for a fair day's work, and improve their education and sound in- 
telligence on public affairs, so that by their own free and honest efforts they 
may earn the respect of all men, and, judging for themselves on political 



30 

questions, may be independent of dictation by sordid and selfish intriguers. 
Wlien the federal government ceases to interfere iu the affairs of separate 
States, and is represented in the South by ofRce-holders whose character will 
command respect and esteem, a complete and harmonious settlement of the 
political questions iu those States will soon be attained. Attachment to the 
Union will be increased when an administration fulfills the duty of making 
imion a blessing. 

We find that in those States where the Democratic party has power, 
trade and credit have revived, enterprise has increased, and harmony be- 
tween the races been promoted. It should be thoroughly understood that 
the freedom and enfranchisement of the colored man, as fixed in the constitu- 
tion, are permanent and indisputable. A cardinal doctrine in the National 
Democratic platform might well be copied from that of the Democratic and 
conservative people of Mississippi in the words, 

"We recognize and will maintain the civil and political equality of all men as established 
by the Constitution of the United States and the amendments thereto."' 

Popularity of Democratic Principles. 

From the first organization of parties in the United States until the inau- 
guration of President Lincoln, democratic principles have almost always 
commanded the approval of the people. They are the essential life of the 
Kepublic. When questions relative to slavery became paramount to all oth- 
ers, a new party of miscellaneous origin arose based on these alone. The 
nation being plunged into war, the anti-democratic portion of the Republican 
party took advantage of the passions and delusions incident to the occasion, 
and enforced its views of finance, revenue, and the administration of govern- 
ment. These have been carried far toward their logical results, as is seen 
in the disastrous condition of the country. The people are anxious for a re- 
turn to the practice of sound pirinciples. Of this they gave unmistakable 
evidence at the elections of 1873-4, when the opposition polled over three 
millions and a half of votes, a clear gain to them of over half a million, with 
a corresponding loss to the party of the administration. 

Can tlie Republicans be Trusted 'I 

The Republicair leaders, thus driven to the wall by an indignant people, 
are attempting to place themselves on Democratic platforms. Can they be 
trusted ? Is the method of trusting old and persistent oflTenders to reform 
themselves, and retaining them in positions of the highest responsibility and 
confidence, after a long series of broken promises, one that commends itself 
to common sense, either in jurisprudence or any affairs of State or ordinary 
life? But we are not left to judge the party by the application of general 
principles. It is condemned by its own acts. 

Three years ago, in the national platform of the Republicans, the party 
pledged itself to the enactment of laws which would "make honesty, 
efficiency, and fidelity the essential qualifications for office." But such ex- 



31 

])()snres liavc llirongliout that period continued to be made as incalculably 
exceed those which at any former time would havo^ irretrievably condemned 
any adminiaistration or party. They <rive us mere glimpses of the evils 
which leaven the whole system. The President and Congress alike aban- 
doned and repudiated the effort to reform. In spite of frequent pledges of 
economy, the ordinary expenditures of the government in 1874 far exceeded 
those of any year since 1868, and Congress at its last session voted for 
$40,000,000 of additional taxes, a sum which alone is two thirds of tlie whole 
cost of the government of the United States in its last year under Demo- 
cratic rule. Ten years ago, and repeatedly since that time, the party in 
power announced that a return to specie payments was one of its cardinal 
principles ; and yet wc are now further from it and the greenback is more 
depreciated than it was five years ago. The party has practically persevered 
in the fictions by which it imperiled the Union and impoverished the people. 
Nothing has been done to promote commerce, restore the American flag to 
its former proud position on the ocean, revive manufactures, or relieve all 
classes and replenish tlie treasury by means of a revenue tariff. The op- 
pression of the South yet continues, although, in obedience to the distinct 
and unmistakable demand of the people of the North, its acts have become 
less glaring. But the desire of the administration for centralization and to 
keep itself in power by military and despotic measures remains unabated. 

Conclusions. 

On every point, the administration and leaders of the Eepublican party 
have amply proved that, however specious their promises may be, no confidence 
can be placed in them ; while the people, by an overwhelming vote, and 
by a common impulse throughout the Union, have already show-n their 
knowledge of the fact and recorded an emphatic verdict. All the well- 
nreant efforts to form a new party have failed as signally as the attempts of 
honest Republicans to purify the organization to which they have belonged. 
Those defeats and the recent and signal victories of the Democratic party, 
aided by other independent and patriotic voters, establish the fact that it is 
the only strong and organized opposition to the abuses which oppress the peo- 
ple. Its principles, directly at variance with those errors and evils which 
have long predominated in the Republican party, make it necessarily the par- 
ty of reform. The Republican party is held in hand by leaders who are 
linked together in various rings, and will practically, if secretly, combine to 
frustrate all sound and comprehensive effects of beneficial changes. Hence 
the only hope of restoring the nation to its former prosperity, and the govern- 
ment to purity, is by continuing to combine the power of the Democratic 
party with that of its new allies, who, by deserting it, would throw their 
weight against the reforms they justly desire. 

The number of steadfast and reliable Democratic voters alone is over 
three millions. This is sufficient proof that they must form the nucleus of 
all successful opposition to the administration and its abuses, and that no 
third party of Reformers, split from the Republican, can have any reasonable 



32 

hope of vitality witliiii anv independent organization. Thus the Presiden- 
tial election in 1876 must be a straight contest between the Democrats and 
Eepublicans. Such a nomination as that which disheartened Democrats 
and resulted in failure must not be repeated. The platform must be liberal 
and sound. Thoroughly as business men and others appreciate the necessity 
of a change, much will depend on the selection of the candidates for the 
Presidency and Vice-Presidency. It is essential not only that they must 
both be Democrats, but also men of sterling and reliable character, both 
personally and politically. It will not be satisfactory to the vast series of 
States known as the North, unless both of them are from that part of the 
Union. This course also is that which will best insure pacification and 
prosperity in the South. The Democrats will cordially welcome all support 
of their principles, without inquiring out the partisan antecedents of those 
who offer it. If those conditions meet due compliance, we shall find that 
the " cohesive power of public plunder" is strong only when the thought 
and power of the people are dormant. It will vanish like a mist when 
honest men, duly aroused by a sense of the impending dangers, once more 
act together for the protection of themselves and their country. 



The Prinxiples and Policy of the Democratic Party. 



A LETTER 



FROM THE 



HON. ELIJAH WARD 



Tlie I'"iist Duty of the Government and People ; Comprelicnsive Review of oiu- 
Recent Financial History; Errors of the Administration; Striking Contrast in 
France; The Law of Financial Panics; Necessity of a Fixed Standard 
of Value ; When and How to Resume ; Benefits of a Revenue 
Tariff; An American Commercial System; Pacification 
and Prosperity in the South ; Republicans Tried 
by their Acts and Found Wanting; Popu- 
larity of Democratic Principles; All 
Who Think Alike Should 
Vote Alike, Etc., Etc. 



REPUBLISHED FROM THE NEW YORK' WORLD. 



NEW YORK: 

F. B. PATTERSON, PUBLISHER, 
33 Cedar Street. 

1875- 



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